The Irish telecoms market has not been exempt from the stresses
affecting the rest of the economy, putting operators under significant
pressure. Both the mobile market and the dedicated mobile broadband
market contracted in terms of subscriptions in H112, while there was
only minimal growth in fixed broadband. There are, however, encouraging
signs that operators are working to deal with these problems, not least
of which is the decision of Vodafone and 3 to merge key parts of their
networks in order to generate cost savings and push mobile broadband
into underserved areas of the country.

Key Data:

- The Q113 update includes BMI's extended five-year mobile, ARPU,
fixed-line and broadband forecasts through to the end of 2017. It is
also the first quarter including our new Risk/Reward Ratings
methodology, which places a greater emphasis on the data and VAS market,
as well as our in-house five-year real private final consumption growth
forecasts.

- The second consecutive quarter of dedicated mobile broadband net
subscription losses occurred in Q212. As a result total subscriptions
declined 2.4% q-o-q leading us to revise our growth forecast for
Ireland's broadband market.

- New data from 3 Ireland's parent company Hutchison Group show the
operator to have a high proportion of postpaid subscriptions in its
customer base at 69% while it also reports the highest ARPU in the
market.

Key Trends & Developments:

Operators in Ireland have begun to rationalise traditional operations in
response to a new economic reality, while at the same time looking for
new areas of growth. For instance, in October 2012 Telefónica announced
the implementation of the Jasper Wireless machine-to-machine (M2M)
platform in Ireland targeted at the nascent M2M market in verticals such
as smart metering, the connected car, security and asset tracking. The
Jasper Wireless Control Centre is a software platform providing
Telefónica's customers with global visibility of all SIMs on the mobile
network, so has particular value to multinationals.

The wireline market is also gearing towards new areas of competition. In
September 2012 Eircom announced the third phase of its fibre roll-out,
which is expected to be commercially launched in 2013.

Eircom will roll out fibre services to 125,000 households and business
across eight counties. After the third phase is completed, Eircom will
be able to serve a total of 350,000 premises with minimum connection
speeds of 40Mbps.